He said regulations prevent new companies from forming and pushing old companies out of businesses.

"Regulations, you are going to regulate these businesses out of existence," Trump said.

Trump repeatedly touted his belief that American corporations will generate "tremendous" jobs if they operate with a lower tax burden. The Republican New York businessman argued that the part of his economic plan that "businesses and people like the most is the fact that I'm cutting regulation."

Clinton swung back at Trump and said his tax plan would add trillions to the national deficit.

"What I have proposed would not add a penny to the debt and your plans would add $5 trillion to the debt," the former secretary of state said.

Trump has called for across-the-board tax cuts, breaking income taxes down into three brackets for married or joint filers: 12 percent for taxable income of $75,000 or less, 25 percent on income between $75,000 and $225,000 and 33 percent on income above $225,000. The brackets for single filers will be set at half those levels.

The U.S. currently has seven income tax brackets with a top rate of just under 40 percent.

Trump has also proposed a 15 percent corporate tax rate for all companies and called to eliminate the tax levied on estates after death. Critics have questioned how much his broad cuts will increase the national deficit.

Most of Clinton's tax policy has focused on drawing more from the wealthy. She has called for a 4 percent surcharge on taxpayers making more than $5 million per year and a minimum 30 percent effective rate for millionaires. She would also aim to close loopholes overseas and abroad that allow the rich to avoid some taxes.

She has also proposed to boost the top estate tax rate to 65 percent for single people with estates of more than $500 million or couples with estates valued at $1 billion or more. The Trump campaign and Republican Party seized on that proposal. The current top rate is 40 percent.

Markets seemed to react to Clinton making headway against her GOP rival as the debate progressed.

U.S. stock index futures erased losses to trade higher amid the debate, and the Mexican peso reversed losses to trade more than 1 percent stronger against the U.S. dollar.